Farmers warned of further milk price cuts
Dairy farmers were today told to expect further falls in milk prices when the EU quota system comes to an end in April.
The warning by the Farmers' Union of Wales and the National Farmers' Union was accompanied by concerns that hundreds more dairy farmers may soon decide to leave the industry.
Currently the amount of milk each country can sell is governed by the EU quota system, but that is due to end in April, leading to concerns that some farmers will seek to produce more milk to boost their revenues when the quota system ends.
The knock-on effect of this could be to drive other farmers out of the industry.
Sian Davies, the National Farmers' Union's chief dairy adviser, said: "There are no signs of things improving until the third quarter of this year. As a result, we will see farmers reducing production because they can't afford to keep producing at that price. Farmers are now having to decide whether to cull cows, reduce production or leave the industry.
"I would urge UK consumers to keep buying cheese, butter and yoghurt made with UK-produced milk. The prospect of a price war between supermarkets could also see the price that corner shops and the catering industry pay farmers being driven down."
The warning comes just days after David Cameron pledged to help struggling dairy farmers across rural Shropshire and Powys by giving more power to the organisation set up to protect grocery suppliers.
The Prime Minister said it is time to look at the powers available to the Groceries Code Adjudicator to ensure milk prices paid to farmers are fair and paid on time.
According to figures supplied by Defra, the average November UK farm-gate milk price was more than 16 per cent lower than the same month in 2013 and is the lowest farm-gate price since September 2012.
Milk prices in the UK are already at their lowest level since 2007. Some farmers are receiving as little as 19p a litre.
However, farmers in the Baltic states are selling their milk for just 16p a litre – half the 32p a litre that several of the major supermarkets are paying their UK suppliers.
Ms Davies said if prices were to fall further in other European member states this would have a knock-on effect on the UK dairy sector, where the number of farmers has fallen to below 10,000, compared with almost 36,000 in 1995.
